Khanyisile Kweyama, executive director of Anglo American South Africa, said the mining sector needed clarity about an ANC resolution that talks of the government capturing an "equitable share of mineral resource rents through the tax system".

"That is probably the one resolution that keeps us [the mining sector] awake at night, and we need the government to spell out exactly what the ANC means regarding this resolution," Kweyama said at the Investing in African Mining Indaba in Cape Town on February 6.

She said members of the Chamber of Mines were set to meet at the end of the week to discuss how to interpret resolutions affecting the sector, and this resolution in particular. "We are encouraged by comments made by Finance Minister Pravin Gordhan in Davos last month that no new government taxes are planned in the near future."

The problem facing mining companies is that opposing messages are coming from the government and the ANC.

Gordhan said there were no plans for new taxes at the moment and Mining Resources Minister Susan Shabangu said this week that the government wants to work with the industry to create a healthier, more sustainable sector.
But the ANC seems to be looking at other ways to get more revenue from the sector.

Chief executive officers of top mining companies, in particular Nick Holland of Gold Fields and Chris Griffith of Anglo Platinum, have warned that the mining sector cannot withstand any further taxation. Griffith said further resource or royalty tax would badly affect the platinum sector, where many mines are marginal.

Export revenue
Kweyama said while there were one or two major mining related taxes in place in some mining regions, mining companies operating in South Africa faced multiple layers of taxation.

export revenue

The sector employs about 500 000 people in the country and makes up about 9% of domestic growth and 60% of export revenue.

Cynthia Carroll, outgoing chief executive officer of Anglo American, said earlier this week that escalating costs were creating a crisis in the sector.

Unfortunately costs appear set to rise if the draft Mineral and Petroleum Resources Development Amendment Bill is approved in its present form.

The Bill creates an export licensing system for designated minerals, which it can be assumed from the existing list of designated products on the ANC's list to include iron ore, coal, phosphates and nitrogen.

Of concern to Webber Wentzel partner and African mining expert Peter Leon, the Bill creates an export licensing system for specified minerals. It also gives the minister the right to set export targets for these minerals, as well as being able to stipulate what percentage of a commodity should be set aside for domestic beneficiation.

A mining industry commentator said the Bill could create an impasse when it comes to coal, with coal miners such as Anglo American feeling the impact of ­conflicting challenges.

"Coal mining companies make a lot of their money selling their product overseas, so they would be affected by the present Bill, which could cap the amount they may export. At the same time they are battling with increased energy costs," the commentator said.

Sentiment reiterated
Kweyama said the high cost of energy was one of the main cost drivers in South Africa. "It is not rhetoric, it is a serious problem for mining companies."

She said that while she was encouraged by the ANC lekgotla's recent refusal to approve Eskom's request for double-digit increases, the company was conducting research into alternative energy sources and better utilisation of present energy sources, such as discarded coal.

Kweyama was positive about South Africa as a mining destination, a sentiment reiterated by others at the conference. "There are minerals and mines all over Africa and there have been talks with ministers of many other African countries at the Indaba about the need to work together and make this continent thrive," she said.

At the conference there were also talks between mining companies about the need to work together in areas where there are joint mining operations to improve conditions of communities and labour sourcing areas.

"This would be more effective than mines working individually and in an uncoordinated manner to assist communities," said Kweyama.

Areas that could benefit include Witbank, Welkom, Carletonville and Rustenburg.